Secondary school pupils and students who started university during the Covid-19 pandemic have been “consigned to the scrapheap”, the employment minister has warned.

Alison McGovern vowed to set up a youth guarantee, a Labour general election manifesto pledge which she claimed would “transform the lives of young people”, speaking at the launch of a think tank report on employment support.

According to the Department for Work and Pensions, the number of young people out of work due to long-term sickness is up 29% since the pandemic, to around 237,000 from approximately 184,000 before the pandemic.

Around 600,000 16 to 24-year-olds are unemployed, 63,000 more than there were before Covid-19 spread throughout the UK in 2020.

An Institute for Employment Studies (IES) and Abrdn Financial Fairness Trust probe has recommended ministers set up a new national digital employment service, in addition to high-street employment, skills and careers centres, and an “on-the-doorstep integration of employment and careers advice within wider public, community and voluntary services”.

Researchers have also suggested new labour market partnerships to draft work, health and skills plans within communities, and an end to the 35-hour rule which demands some benefits claimants complete up to 35 hours of work-related activity per week.

“The lockdown generation has been failed, consigned to the scrapheap, because they have been denied the support and opportunities to find work, get into work, and get on at work,” Ms McGovern said on Wednesday.

“It’s truly shocking that we have businesses crying out for staff at the same time there are queues round the block for foodbanks – a dire situation that we’re determined to put right.

“The obsession with benefits management must end if we’re to bring about the change the country is crying out for, and that’s why we have a plan to get Britain working again.

“We’re going to set up a youth guarantee to transform the lives of young people by providing work, apprenticeships and skills training to everyone who needs it.

“That is how we will deliver on our mission for growth across the country and ensure future generations are never abandoned by their government again.”

IES researchers argued in their report “Working for the Future” that “the 35-hour requirement is driving much of what is wrong with our current approach: forcing people to constantly justify their actions, tying advisers up in checking what people did last week, and pushing people who are unable to spend 35 hours a week looking for work to apply for other benefits where they would face fewer requirements but also end up further from support”.

They added: “It is a bad policy, with no evidence to justify it, and its abolition would be wholly positive.”

Labour pledged a “youth guarantee of access to training, an apprenticeship or support to find work for all 18 to 21-year-olds” before July’s vote.

On young people, IES researchers wrote: “The current approach is not fit for purpose – characterised by multiple different accountabilities, funding streams and services; often competing priorities; short-term reform and stop-start initiatives particularly around youth engagement and vocational training; cuts to youth services; and many unemployed young people ineligible for (or unwilling to claim) social security benefits.

“This has also happened against a backdrop of rising ill health for young people, particularly mental health, and now rising numbers of young people outside full-time education and the labour force.”